6 Lies About Solar Power. Believe Them At Your Own Risk.
There are a lot of misconceptions about solar energy and solar panel technology. One misconception is that solar doesn’t make good financial sense, but that just isn’t true. Another misconception is it’s a good idea to wait for the price of solar to go down before you make the switch, but with the recent continuation of the Investment Tax Credit, now is the best time to invest in solar panel technology. With that said, below are some commonly held lies about solar.
1. State Solar Incentive Programs Will Continue
Many state solar incentive programs have already been used up for all Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison territories. There are a number of different state solar incentive programs that are no longer available, such as the California Solar Initiative, Emerging Renewables Program and Self-Generation Incentive Program. These state solar incentive programs were used up quickly but are no longer necessary in order to get a good deal on a solar system because of the current cost of solar. From 2009 through 2015 the average price of U.S. solar dropped 70%, meaning solar systems are more affordable now than ever and don’t require state incentives to make good financial sense.
2. The Next Net Energy Metering Program Will Be Even Better
Net energy metering is the billing mechanism used by utilities for solar customers. When electricity is created it must be used or it goes to waste. When your solar system produces more electricity than you’re using in the moment, it goes to the utility grid to be used by someone else. When this happens, the utility gives you “credit” for all of the excess electricity you’ve generated. Your system produces energy during the daylight hours, so this is likely when you’ll have excess energy that’s later credited back to you when you need it at a different time (such as at night when the sun isn’t out). Your system will also likely generate more electricity in the spring and summer months when there are more hours of sun in a day. The “credits” you receive back from the utility roll over from month-to-month, so you can use the credits you received in the sunnier months during the fall and winter. All of this can be tracked with your home energy monitor that comes with your solar system.
Solar customers get an electric statement every month that details production and usage. The utility charges all solar customers a monthly fee for connection and grid infrastructure maintenance. However, you don’t pay for any electricity until the 12-month anniversary of your solar system going live. Ideally you will break even or reach — as we call it in the industry – “net zero” at that time.
Right now the current net metering program recognizes the solar electricity that a home produces to be of equal value to the electricity the home draws from the utility grid at night and on cloudy days. When a solar system produces excess electricity, your meter literally runs backward as the power flows onto the grid, and when you need that power back your meter runs forward as the power from the grid flows back to your house.
On October 7, 2013, Governor Brown signed Assembly Bill 327, which gave the utilities until December of 2015 to develop a new net energy metering agreement. The utilities were also allowed to set a cap of 5% of their aggregate customer peak demand for net energy metering 1.0 – for SDG&E that equates to 607 megawatts of installed solar. The net energy metering program has received some criticism from utilities, but on January 28, the California Public Utilities Commission (CPUC) voted to continue the net energy metering program indefinitely. The CPUC’s recent decision preserves consumer choice and rejected utility attempts to kill the program. Net energy metering 2.0 is not as favorable as the current program, but it still allows for the financial benefits of solar to continue.
Net energy metering 2.0 does the following:
- It upholds full retail credit for net energy metering and ensures customers who install solar under the new rules won’t be subject to future changes to net energy metering for 20 years.
- It creates an interconnection fee between $75 and $150 adds “non-bypassable charges” that equal about $8-9/month for most residential customers.
- It rejects utility proposals for demand charges, capacity fees, grid access fees, standby charges and monthly netting.
- The new rules require residential net energy metering 2.0 customers to be on time-of-use rates (commercial and agricultural customers are already on mandatory time-of-use rates).
If you already have solar or if you install your solar before these changes goes into effect, then you fall into the net energy metering 1.0 program for 20 years from the time your system was installed. The California Solar Energy Industries Association estimates SDG&E will meet their net energy metering 1.0 program cap in April 2016, but net energy metering 2.0 isn’t expected to begin in SCE territory until early 2017.
Also, the time-of-use rates that are a part of net energy metering 2.0 will not apply for the first five years of the program in SDG&E territory.
3. Huge Advances In Solar Panel Technology Are Coming
Since the beginning of solar technology, solar panel efficiency has increased dramatically. Panels are more efficient than ever. Their efficiency was once increasing rapidly year by year, but as the technology has gotten more and more advanced, it no longer makes sense to wait to go solar in order for the technology to become more efficient. In recent years, solar panel efficiency has increased by small percentages, which is not enough of an incentive to hold off on getting your solar system installed before the expiration of the Investment Tax Credit.
4. You Will See Solar Panels Getting Cheaper
Due to the end of state solar incentive programs in California and the eventual expiration of the investment tax credit, solar energy cost is about to rise. Thinking you will see solar panels getting cheaper is a myth. Cost will likely rise not because changes to manufacturing or solar panel efficiency will negatively affect solar energy cost, but because the coming changes to the investment tax credit, as well as the state solar incentive programs, will hit homeowners’ bottom lines and increase the amount of time it takes for them to experience their ROI. All of this means right now is the best time to invest in solar.
The Investment Tax Credit is a dollar-for-dollar reduction in federal income tax for anyone who purchases solar panels for their home or business. The amount credited is equal to 30% of the purchase price of your solar system. It’s not a rebate (which helps you pay for your system directly). And it’s not a tax deduction (which reduces your total income and thereby decreases your tax bill by a small amount). It’s dollars that you don’t have to pay the IRS, or that the IRS will refund to you in April if you’ve overpaid.
The Investment Tax Credit was set to expire at the end of 2016, but as of December 2015, it’s been extended for five years. It will retain the 30% rate until 2019. In 2020, it will fall to 26% and then down to 22% in 2021, after which it will remain at 10% for commercial solar and drop down to 0% for residential projects.
So if you’ve been thinking about going solar, now’s the best time. Be sure to make the switch to this renewable energy before this generous tax credit goes away for good!
5. Solar Panels Are More Expensive Than Energy From The Utility Company
If your electric bill is around $120/month or more, a switch to solar will mean you’ll be paying less for electricity per month than you were without solar. Going solar can provide you with considerable savings. Your system will pay for itself in 5-7 years, and then you’ll be enjoying close to free electricity for the entire 25+ year life of your system. A switch to solar decreases your dependence on your utility because solar panels allow you to generate your own electricity with the power of the sun. With low monthly payments and little or no money down, taking advantage of the benefits of going solar could eliminate your electric bills and your monthly bill anxiety.
6. Solar Panels Don’t Increase Home Value Very Much
When you install solar panels home value increases. Lawrence Berkeley Labs conducted a multi-state study which proved having a purchased solar system on your home increases its value more than almost any other home improvement investment. In fact, the additional premium of residential solar panels to your home value has the potential to offset the added cost of the solar panels entirely. So one of the benefits of solar panels is that a purchased system not only saves you money on your electric bill, but it also adds value if you go to sell your house in the future.
Thinking about buying a solar system? Get a free quote with us today and see how much solar can save you! Or if you’ve been wondering if solar is right for you, give us a call at (877) 543-8765.